Investment Intelligence When it REALLY Matters.
A Look at Harry Dent's Track Record
Update on Dent (April 25, 2015): Check out this new video on Dent, showing his terrible track record Broken Clock Moron Of The Month: Harry Dent
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Moron of the Month: John Williams
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Mike Sheds More Light on the Gold Pumping Crime Syndicate
The Best Video Ever Created Exposing The Gold Pumping Scene
Stathis Exposes Broken Clock Jim Rogers And The Media (Extended)
Dismantling John Williams' Hyperinflation Predictions
Peter Schiff's Valcambi Gold Destroys Customers' Purchasing Power
Last time I discussed another member of the media club, Harry Dent. I basically demonstrated how Dent is no different than the other experts praised by the financial media. The previous article can be found here.
Here, I continue with a review of Dent's track record. As you will see, similar to the other so-called experts promoted by the media, Dent's expertise lies more in marketing than in market forecasting.
Just have a look at one of Dent's marketing pictures shown below. It looks like he commissioned the William Morris Agency to put this together. This is pure marketing, created to drive the perception that this man can make you rich. But there is much more to Dent and his business plan.
In order to put Dent’s predictions into proper perspective, you need to know a bit about his track record. Dent has made a career out of making wild predictions as the result of a bubble economy. The only problem is that he never realized that the bubble was fueling this “growth.” So obviously, he had no idea what would cause the bubble to implode, nor did he understand the full impact.
Let’s take a look at some of his books. 
In his first book, The Great Boom Ahead (December 1993), Dent forecast Dow 8500 by 2006-2010. While he turned out to kind of be right (several years) later, in my opinion the prediction lacked credibility because the massive credit bubble fueled the stock market. If Dent had realized that, he might have seen the collapse coming. Instead, Dent based his forecast on Romper Room demographic arguments.
There are so many variables that must be considered ahead of demographics that I cannot even list them here. But I will mention one of the less obvious factors.
The rise in the stock market in the 1990s was largely due to the shift from pension to 401(k) plans and the rise of mutual funds. Of course, the number reason for the bull market period of the 90s was the massive credit bubble created by the Federal Reserve and Washington. I discussed these points in great detail in AFA.
As the fact show, Dent not only missed the boom, he also missed the collapse. While he discussed a “downturn” in this and several books thereafter, according to Dent, the correction was to occur only after the Dow had reached 40,000/41,000 and the Nasdaq 13,500-20,000.
I think it’s safe to say that an idiot could predict a correction if the Dow were to soar to 40,000 and the Nasdaq to 20,000 by 2008-2010. Thus, Dent only felt that a correction would occur due to the rapid appreciation of these markets.
Furthermore, in The Great Boom Ahead Dent claims a “downturn” will occur in 2010 due to the retirement of the baby boomers.
This is completely ridiculous, as the baby boomers only began to retire in 2010. Any real significant economic effects due to the retirement of baby boomers would only be felt after several millions of boomers had retired, which would push this date past 2015 in my opinion.
Based on this severe oversight, it would appear that Dent lacks a good deal of common sense. And his demographics arguments are so simplistic that they serve no utility. For instance, Dent doesn’t account for changing patterns of immigration over the decades, the impact of free trade and many other factors. As a result, Dent’s own claims that he predicted the collapse are completely invalid in my opinion.
If you read what Dent says about his track record, you will notice he is always spinning things to make unsuspecting sheep think that he has been right about everything.
A few years after Dent released this book, he was propelled as a pitch man for Wall Street and the mutual fund industry. He became a media whore on the Bubble Network (CNBC).
Using Dent’s simplistic and grossly inadequate demographic arguments as a foundation, Wall Street followed up with its own brand of demographic bologna. Notably, Ed Kerschner, once the chief Investment Strategist of PaineWebber (now UBS) was pitching similar arguments.
As a result of Kerschner's sales pitch calling for a "New Economy" and the end of brick and mortar, he became one of the most highly regarded strategists on Wall Street, with numerous firms trying to lure him over. I remember this well because I was working at PaineWebber at the time.
Just as the stock market was making its lows, Kerschner was named a runner-up in 2002 in Institutional Investor magazine's survey of the top U.S. Wall Street strategists.
Finally, in 2004 shortly after UBS bought PaineWebber, Kerschner was lured over to Smith Barney as its new Chief Investment Officer. Smith Barney had been courting Kerschner ever since he rolled out his delusional prophecy; a prophecy that blew up. But on Wall Street, just as in the financial media, you are rewarded not for how accurate you are but how many sheep you can lure. This my friends is how sales works.
Rather than a “New Economy” buttressed by a spending wave from baby boomers and the Internet revolution, the true force behind the bull market was a huge credit bubble created by Wall Street, commercial banks, Washington and the Federal Reserve.
If in fact Dent truly recognized the primary driving force behind the expansion of the 1990s, he would have also predicted that this bull market would come crashing down hard after 2000. Instead, by 1998 he wrote another book that predicted Dow 41,000 and Nasdaq 20,000 by 2008. He called this book The Roaring 2000s. I’ll get back to this book shortly.
Dent’s simplistic approach to predicting complex trends is a common tactic used by snake oil salesmen because they want to appeal to the largest number of prospects. The sales strategy is to hook as many fish as possible so you want to design a net that catches the largest number of fish. That means you must keep things simple. 
While Dent’s demographic arguments are much too simple to provide any real predictive power, he certainly does a great job selling his ideas. And that’s all he cares about because most people have short memories when it comes to track records. It’s all about convincing people that your snake oil will make those who buy it rich. 
His next book was The Great Jobs Ahead (1996). As we know, instead of a period of great jobs, we have seen the exact opposite. Remember, NAFTA was signed in 1992. So if Dent understood what was really going on, the title of his book would have been China: The Great Jobs Ahead.
In his next book, The Roaring 2000s (published in 1998, 1999 and 2000), Dent predicts the Dow to reach 41,000 and the Nasdaq to reach 20,000 by 2008 (another version has the Nasdaq at 45,000 by the same year). Of course we all know what happened in 2000. The following year, things got much worse. By October 2002, the market hit its lows, the Dow below 8000 and the Nasdaq below 2000.
Interestingly, in The Roaring 2000s Dent gave some general investment advice that apparently he no longer agrees with:
1. Use buy and hold strategies, don't try to time the market;
2. Use mutual funds to most efficiently diversify your holdings;
3. Use asset allocation. The greatest returns result from the correct asset allocation.
Back then, Dent was a hack for the mutual fund industry. But as you can imagine, the industry dumped him into the ocean after his insane forecasts blew up in his face. As you will see shortly, he made one last attempt to jump aboard the mutual fund gravy train.
After hiding his head for a few years, Dent was at it again just as any good salesman
would be. It’s common knowledge that the stock market enters a bullish trend after being sliced up during a bear market. After all, this is the basis of the bull-bear market cycle. So Dent seized on the opportunity of a market that had already bottomed by pumping out a new book called The Next Great Bubble Boom published late 2004. Again Dent predicts the Dow to hit 40,000 this time by 2010, and the Nasdaq to reach at least 13,500 and potentially 20,000 by 2009.
If you keep predicting Dow 40,000 it will eventually happen. In the meantime you can lose a great deal of money. This was Dent’s last attempt to gain favor with the mutual fund industry but they weren’t listening. As you will see, Dent decided to join the doomer crowd and target Main Street sheep after seeing how that route had expanded over the years.
Let’s have a look at the inside flap of this book. This material is typically written by the author and reedited by the publisher to ensure the maximum amount of spin.
“Harry S. Dent has been among the most successful forecasters of his time: His books The Great Boom Ahead and The Roaring 2000s predicted the 1990s boom ahead of anyone else.”
[Notice how he states that The Roaring 2000s “predicted the 1990s boom.” Really? You see, Dent is trying to spin the facts, as The Roaring 2000s was published between 1998 and 2000, at the peak of the boom. The fact is that this book focused on his prediction of Dow 40,000 and Nasdaq 20,000 by 2008 (revised later to 2010.]
“In this new, provocative look at the coming years, Dent again casts his discerning contrarian eye on what he sees as the good times to come—and the woes to follow.”
[Okay so we all know that booms and busts occur. Dent dramatizes this evitable economic cycle in order to link his basic demographic arguments to this cycling. But let’s see what he has to say.]
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